China´s domestic cotton prices continue to advance, as buyers still find it difficult to source top-quality cotton. One factor that is causing great concern is found in the province of Xinjiang. For the past two seasons, Xinjiang cotton crops have exceeded expectations, with high grades readily available in large supply. The role of Xinjiang cotton in overall domestic trade has significantly increased over the past two seasons, and with this has brought a greater deal of transparency to the region. Earlier in the season, the province had been expected to produce another record cotton crop, but that now appears unlikely to be the case.

There are fears that total output in Xinjiang may not exceed last season. Lower yields have emerged from the northern cotton belt. In Manasi County, the average seed cotton yield dropped 12 percent to 3,750 kilograms per hectare, and the quality of the crop has also been lower than expected. Normally, the majority of China´s T129 and T229 quality cotton comes from Xinjiang; however, in the north, T328 grades are dominating classing, which is causing unease. These conditions have ignited a major rally in both seed cotton and lint. Over the past few days, seed cotton prices for T229 grade have soared at Production and Construction Corps (PCC) farms, with the average PCC paid price now surpassing 5.69, which is up over 16 percent -- prices of other seed cotton have increased by a smaller percentage.

Seed cotton prices have also rallied across East China, where last week, the average price of seed cotton increased .10 yuan per kilogram. Cottonseed prices continue to soar, having increased .12 yuan per kilogram last week, alone. Lint prices opened this week very firm, gaining up to 70 yuan per ton on average. The average T3248 landed-the-mill is now approaching 13,600 yuan per ton, while the average inland price in Xinjiang is 13,560 yuan per ton, which reflects the level of concern over the crop in this province. The average landed-the-mill price for T229 is up to 14,150 yuan per ton, the highest level since September 14. Prices have now rallied the equivalent of 3.00 U.S. cents per pound off the September lows.

Source:globecotnews